Indian Polymer Business

- Status & Outlook

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 In this presentation

• GAIL In Petrochemical Business

• Domestic Scenario
• Way Forward

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GAIL In Petrochemical Business

Natural Gas Olefins Polyolefins Processors for

End Markets
HDPE/LLDPE
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 BRANDS
• G-LEX (2 * 100,000 MTPA)
HDPE FROM MITSUI PLANT

• G-LENE ll (1* 210,000 MTPA)

LLDPE FROM NOVA CHEMICALS SWING PLANT

• G-LENE hd
HDPE FROM NOVA CHEMICALS SWING PLANT

Capacity : 4,10,000 PA 4
 PRODUCT SEGMENTS
• HDPE :

i) Raffia & Mono Filament

ii) Blow Molding (General purpose & HM Blow)
iii) Injection Molding (High & Low MFI)
iv) HD & HM Films
v) Pipe & Ducts

• LLDPE :
i) Films (Slip & Non-Slip)
ii) Rotational Molding
iii) Extrusion Coating

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Indian Market Share-HD/LL

IMPORTS GAIL
16% 20%

HPL
23%
RIL
41%

Over 2 Mn TPA market 6

 ZONAL/BRANCH OFFICE -
NETWORK
ZO/BO: 11 LOCATIONS

* CHANDIGARH

• NEW DELHI
* LUCKNOW
JAIPUR * *
PATA

* BHOPAL
* AHMEDABAD * KOLKATTA

MUMBAI *
* HYDERABAD

BANGALORE *
* CHENNAI

STOCK POINTS IN 37 LOCATIONS 7

 Capacity Growth of GAIL
YEAR D/s Capacity Remarks

1998-99 260 Inception

2005-06 310 DBN of NOVA plant

2006-07 310 Cracker 5th furnace hooked

2007-08 410 HDPE-II commissioned

6th Cracker to be implemented in FY 2010-2011

Capacity enhanced by 58% since inception

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 Petrochemicals Contribution- GAIL Portfolio
► Capacity Share ~ 23% ► Market Share (Domestic) ~ 20%

► Profit contribution (PBT) ~ 33% of the total GAIL’s profit in FY 2007-08

4500 35.0
Share in Revenue 14 %
4000 3855 32.5%
30.0

Petchem PBT contribution %

3429.09 30.2%
3500 3151.55
25.0
PBT (in Rs. crores)

2906.05
3000 27.7%
20.7% 20.0
2500

2000 15.0
1500 1254.23
951.48 10.0
1000 804.24 711.05
5.0
500

0 0.0
`2004-05 `2005-06 `2006-07 `2007-08
Financial Year

GAIL-PBT PC-PBT PBT contribution

Source:- GAIL Annual Reports & Industry Data
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PBT increase by 32% in 2007-08 wrt 2006-07
DOMESTIC SCENARIO

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Per Capita Polymer Consumption
Year 2007 2010
Global 25 28.9
Asia 17 21.6
China 18 24.2
India 5 7.4
PCC – Current Per Capita Consumption of all
polymers (Kg)

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India Asia China World

Wide Scope of Polymer Consumption in India 11
 Petrochemical Map - India
(MMTPA)
Feed HDPE-
Company/Location Stock LDPE LLDPE PP
RIL (IPCL) /
Nagothane /Mah Gas 0.1 0.24 0.1
RIL (IPCL)
/ Gandhar/ Guj Gas - 0.16 - Pata

Jamnagar
GAIL / Pata / UP Gas - 0.41 -
Baroda
Sub Total 0.1 0.81 0.1 Gandhar
Hazira Haldia
RIL (IPCL) / Naphth
Nagothane
Baroda/Guj a 0.1 - 0.15
Naphth
RIL / Hazira / Guj a - 0.45 0.4
Naphth
RIL / Jamnagar / Guj a - - 1.1
Petrochemical
Naphth Complex
HPC / Haldia a - 0.55 0.3
Sub Total 0.1 1.0 1.95
TOTAL 0.2 1.81 2.05

Capacity of PE and PP is about 2.0 MMTPA each

– Reliance is the market leader – GAIL and HPL are other major players 12
 HD/LLD Industry Sales & Growth Trend
2000 18%
1790
1800 1592 16%
1600 14%
1379 15.40%
Volumes (in KTA)

1400 1273
12%
1140
1200 12.40%
11.70%
10%
1000
9% 8.30% 8%
800
6%
600
400 4%

200 2%

0 0%
2003-05 2004-05 2005-06 2006-07 2007-08

CARG-11% Financial Years

Domestic Sales `% Growth

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Source: Industry Data
 GAIL EXPANSION PLAN
YEAR Polymer Action Status
Capacity
(MTA)
2008 4,10,000 Existing -

2009-10 5,00,000 6th Furnace In Progress

Installation

2012-13 7,80,000 BCPL (A 70% JV of D/S Technology -

GAIL) (2,80,000 Innovene/ Lummus
MTA) Selected
2013-14 10,80,000 Pata Expansion from DFR Study under
5 Lac MTA to 8 Lac process.
MTA
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 Petrochemical Future Addition - India
(MMTPA)

Expected
PE PP
Timeline
BCPL, Assam HPL, Haldia 0.2 0.15 2009-10
HMEL, Bathinda
GAIL, PATA 0.1 - 2010-11
BCPL, Assam 0.22 0.06 2012-13
GAIL, Pata
IOCL, Panipat 0.65 0.60 2009-10
HMEL, - 0.35 2011-12
BATHINDA
HPL, Haldia
OPAL, DAHEJ 1.02 0.34 2012-13
OPAL,Dahej
GAIL, PATA 0.30 - 2013-14

Total 2.49 0.9

SEZ status for Export focus

About 2.5 MMTPA of PE capacity and about 1 MMTPA of PP capacity

are being added within 2013. Domestic /DTA capacity augment ~1.7MMTPA 15
 Market Status
• Indian Polymer market is over 5 MMTPA
(PE-2 ; PP – 2; PVC-1.2; LD-0.2, PS-0.5)
• 75% of the processing in SSI

• Over 3.3 Mn employed in ~ 22,000 units

• Processing m/cs > 55,000 nos.

• Average unit output 200-225 TPA (¼ th of

China & 1/8th of USA) 16
 Challenges
• Per unit processing capacity- LOW

• Avg. capacity utilization < 70%

• High use of re-processed plastic (~30%) for

“ Bottom of the Pyramid” market.

• Cost competitiveness LOW (Low Productivity)

• Producer Margins to be ‘tight’.

• Policy embargos due to poor waste management

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 Opportunity
• India’s growth is largely Internal consumption driven
( Indian trade share at 1 to 1.4 % of the global trade).

• Recession proof market is 60% - rural & agri-based

population. Agri-GDP growth AAGR @ 4.5%, segment
consumption to be stable. (30% PE in Agri directly)

• End products (packaging) largely for essential and non-

conspicuous consumption, ( barring PP in auto segment)

• High scope of increase of irrigable cropland ( only 32%

currently). Subsidy outlay about 40-45% of the farm
subsidy.

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 Way Forward
• Industry to collaborate with state governments
for waste disposal mechanism.

• Processor capacity scale-up with increased productivity

to improve domestic consumption as well as cost
competitiveness.

• Increased consumption of plastics for agri-productivity

& agri-product storage to provide growth impetus.

• Base case of 5% AAGR. GDP growth in next 5 years to

increase polymer consumption to ~ 7.5 MMTPA.

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THANK YOU!

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 Brahmaputra Cracker Polymers Ltd.
(BCPL- A 70% JV of GAIL) - Update
Sr. Product Technology / Capacity Expt. Date of
No. Licensor (TPA) Commencemen
t

01 HDPE / Innovene Gas 2,20,000 2012-13

LLDPE Phase /
M/s Ineos, UK

02 PP M/s Lummus 60,000 2012-13

Novolen,
Germany

03 Naphtha/ M/s Lummus 2,80,000 2012-13

Gas
Cracker

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